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July 15 — Staff attorneys for the Federal Election Commission concluded former Rep. Jean Schmidt
(R-Ohio) “knowingly and willfully violated” campaign finance law by accepting hundreds
of thousands of dollars worth of free legal services. The FEC commissioners, however,
deadlocked 3-3 in a party-line vote on whether to approve the staff conclusion.

Schmidt's lawyers were paid by a nonprofit corporation, the Turkish Coalition of America
(TCA), during a long legal battle with a political rival, David Krikorian. The arrangement
violated a long-standing prohibition against corporate contributions to a federal
candidate, a
newly released report from the FEC general counsel's office said.

In the commissioners' vote on the report, the three commissioners holding Democratic
seats voted in support of the conclusion while the three FEC Republicans dissented.

After that vote, the FEC settled lesser charges against Schmidt's campaign, calling
for a $2,500 fine.

The nonprofit group TCA agreed to pay a $25,000 fine to the FEC for giving an illegal
contribution to Schmidt.

Schmidt Attorney: FEC Staffers ‘Wrong.'

The settlement was first revealed last month by a private attorney involved in the
matter (See previous story, 06/21/16). The FEC released the case file on July 15.

“Based on the continued acceptance of legal services from TCA, following plain notice
from House Ethics of the applicable legal prohibition, we recommend that the Commission
find reason to believe that Representative Jeannette H. Schmidt and the Schmidt for
Congress Committee … knowingly and willfully violated” the ban on accepting corporate
campaign contributions, the counsel's report said.

An attorney for Schmidt, Donald Brey of Taft Stettinius & Hollister in Columbus, Ohio,
told Bloomberg BNA in a July 15 phone interview that the FEC staff's conclusion about
Schmidt was incorrect.

“They were wrong, and obviously there was not a majority of commissioners to go along
with them,”
he said of the attorneys in the FEC counsel's office.

Long Legal Battle

Schmidt was put on notice in consultations with the House Ethics Committee that accepting
free legal services from a nonprofit corporation in connection with an election was
illegal, the FEC counsel's report said. Yet, even after being notified, Schmidt and
her campaign continued to rely on the free legal services in a defamation lawsuit
in which she was seeking $6 million in damages.

Schmidt was defeated in a Republican primary bid for re-election in 2012 by now-Rep.
Brad Wenstrup (R-Ohio), who went on to win the seat. Schmidt had been dogged by ethics
complaints before leaving Congress, mostly centered on her legal feud with Krikorian
over Turkish-Armenian issues.

Krikorian ran unsuccessfully in 2008 and 2010 for the seat then held by Schmidt. The
legal case involved allegations that Schmidt was defamed by Krikorian during campaigns
in the Cincinnati-area congressional district.

‘Simply Breathtaking.'

In a statement e-mailed to Bloomberg BNA, Krikorian's attorney, Chris Finney, said:
“We are appalled at the level of corruption demonstrated not only by former Congresswoman
Schmidt, but also by the House Ethics Committee, and now the FEC, who have simply
ignored damning evidence that should have led to criminal prosecution.”

Finney said it was “simply breathtaking”
that Schmidt continued to accept illegal gifts in the form of legal services from
the Turkish Coalition even after the Ethics Committee ordered her to stop.

“One thing that we've discovered over the past few years is that our ‘overly pessimistic'
view of the Ethics Committee and the FEC was actually wildly optimistic,”
Finney added.

Finney's statement referred to a recent disclosure report filed with the FEC following
settlement of the enforcement matter—designated Matter Under Review (MUR) 6494—reporting
more than $650,000 in “in-kind contributions” from TCA for legal services provided
from 2008 through 2011. Specifically listed was more than $150,000 in payments after
August 2011, when the House Ethics Committee released a report of its investigation
into the legal services provided by TCA to Schmidt.

Schmidt Repaid $43,000

The Ethics Committee did not penalize Schmidt in 2011 because it said she had been
unaware of the payments being provided by TCA to support the lawyers representing
her.

The Committee announced that it had resolved an inquiry involving Schmidt and the
payment of her legal costs, concluding she received an impermissible gift of about
$500,000 in the form of payments of legal fees by the TCA.

The Ethics Committee was following up on an investigation by the independent watchdog,
Office of Congressional Ethics.

Although the committee concluded Schmidt did not know she was receiving an illegal
gift in the form of payments to her lawyers, the committee said that Schmidt was required
to “disclose and repay the gift” represented by the cost of legal service she received.
Schmidt later left Congress—and the jurisdiction of the House Ethics Committee—without
making a full repayment.

The new disclosure notice filed with the FEC July 8 said Schmidt made one repayment
of about $43,000 in January 2012. This was the amount ordered by the Ethics Committee
as an “immediate”
repayment when the August 2011 report was released.

To contact the reporter on this story: Kenneth P. Doyle in Washington at
kdoyle@bna.com

To contact the editor responsible for this story: Heather Rothman at
hrothman@bna.com

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